Comcast’s planned buyout of Time Warner may not be a good deal for consumers - The Buffalo News
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Comcast’s planned buyout of Time Warner may not be a good deal for consumers

How might Comcast’s proposed acquisition of Time Warner Cable affect consumers in Western New York? Spoiler alert: It doesn’t look good.

Limited programming choices for cable customers, slower data speeds for Internet customers, and price hikes and lousy customer service for both. Those are just a few things critics are predicting will come of the deal.

Comcast says the merger will have many “pro-consumer benefits,” such as technical upgrades, faster data speeds, improved video service and more high-definition channels. It would also give the company more buying power to negotiate with cable channels.

“I believe that our customers and yours stand to benefit tremendously from the combined capabilities of these two great companies,” said Robert D. Marcus, Time Warner COO, to Comcast CEO Brian L. Roberts, in a conference call Thursday.

But since the merger will add millions of customers to Comcast’s rolls, it could actually bog down data speeds, tech critics said. And if Comcast pricing history bears out, faster data speeds and more channels could lead to higher prices.

While Comcast has historically raised prices across all its tiers when it increases data speeds, only its customers shelling out for the highest-speed plans see significant improvements, according to analysis by the Washington Post.

“If you want high speeds, you’re going to have to pay high prices. You’re going to need cable and they know that they’re the only provider of that,” said Ted P. Schmidt an economics professor at SUNY Buffalo State. “Now they’ve got even more power to set prices.”

It was unclear whether customers will have to change email addresses and learn a new lineup of cable stations.

Comcast will take pains to convince regulators that it does not have a monopoly, but except for areas where Verizon FiOS is available, Time Warner has been the only viable provider of cable television and broadband Internet service. Satellite options are available but, especially when it comes to Internet access, satellite quality isn’t comparable to what cable service can provide, critics said.

There’s no word yet on how the merger might affect the 1,000 Western New York workers employed by Time Warner Cable, but Sen. Charles E. Schumer and State Sen. Tim Kennedy said Comcast has confirmed that it will follow through on Time Warner’s commitment to add 250 to 300 call center jobs in Buffalo. But at the same time, Comcast has said that it would cut its operating costs by $1.5 billion in three years and that money has to come from somewhere.

The merger’s expected impact on customer service and consumer satisfaction is easier to predict if you ask current Comcast customers. They complained on social media sites Thursday about the service they receive, calling it “horrendous,” “terrible” and “worse than Time Warner.”

But complaining about the cable company is a pastime for some. Comcast actually ranks slightly higher than Time Warner Cable for customer service in the American Customer Satisfaction Index, but to put it in perspective, both are ranked near the Internal Revenue Service.

If anyone stands to benefit from the deal, it’s Time Warner Cable investors. The offer price is a 70 percent increase over the stock price a year ago.

“A deal makes huge strategic sense,” said Timothy Horan, an analyst with Oppenheimer, in a report.

He expects the deal to pave the way for even more consolidation among companies, particularly satellite providers Dish Network and DIRECTV, cell phone service providers Sprint and T-Mobile and telecommunications companies AT&T and Vodafone. It could also prompt those larger companies to buy up cloud service providers such as Rackspace Hosting and competitive local exchange carriers, such as Colorado-based TW Telecom and Level 3 Communications, which compete with established local telecommunication companies around the country.

As part of the deal, Comcast has committed to give up 3 million of the 11 million subscribers it would pick up in the deal. Charter Communications is the likeliest company to buy up those subscribers, but there is no word on what market those 3 million subscribers might be in or whether it would affect Western New York. Charter, a Connecticut-based telecom company with about 7 million customers in 29 states, had pursued Time Warner Cable for months before Comcast closed the deal. Time Warner rejected an offer of $37.8 billion last month.

Time Warner Cable closed up $8.94, or 6.6 percent, to $144.25 on Thursday. Comcast fell $2.28, or 4 percent, to $52.97.


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